Heathrow boss John Holland-Kaye hints passenger fees could increase to meet rising costs as airlines ramp up operations after the pandemic
- Read more: Heathrow boss John Holland-Kaye steps down from leading role
The boss of Heathrow Airport has called for airline passenger fees to be increased after carriers enjoyed a bumper year of profits following the lifting of Covid travel restrictions.
Outgoing chief executive John Holland-Kaye said the fact the west London airport remains loss-making while airlines return to profit demonstrates the Civil Aviation Authority (CAA) has ‘got the pricing wrong’.
The CAA’s final proposals involve the cap on Heathrow’s average charge per passenger falling from £30.19 last year to £26.31 in 2026. A decision on the cap is expected shortly.
Increasing the cap could see tickets become more expensive if airline bosses choose to pass the extra costs onto the consumer.
It comes as Heathrow today reported underlying pre-tax losses of £684 million for last year, compared to losses of £1.3 billion in 2021, when the industry was battered by pandemic-era travel restrictions.
Outgoing chief executive John Holland-Kaye (pictured) said the fact Heathrow Airport remains loss-making while airlines return to profit demonstrates the Civil Aviation Authority (CAA) has ‘got the pricing wrong’
The CAA’s final proposals involve the cap on Heathrow’s average charge per passenger falling from £30.19 last year to £26.31 in 2026. A decision on the cap is expected shortly
It said no dividends were paid in 2022 and none are planned for 2023 as it continues to rebuild.
Meanwhile the airline industry is on track to boast its first post-pandemic profit this year, with carriers set to rake in a collective £3.9billion in net income in 2023, the International Air Transport Association predicted in December.
Mr Holland-Kaye told the PA news agency: ‘We are still loss-making, and tomorrow I suspect we’ll have IAG (British Airways’s parent company) – one of the biggest airlines – announcing they’ve returned to profit, maybe even returning to dividends.
‘It shouldn’t be the case that the economically-regulated business which should have a smooth level of financing – that’s one of the benefits of regulation – should still be loss-making when the unregulated airlines are back to profit already.
‘That’s one of the things that shows the CAA has got the pricing wrong.
‘The pricing that they have set in their final proposals is lower for this five-year period than it was for the last five-year period, even though there are far fewer passengers and the financing costs are much higher because interest rates have gone up.
‘So the CAA has clearly got it wrong so far. We’re hopeful that they will correct that in a couple of weeks, but if not then we have the opportunity to appeal.’
Major airports such as Heathrow suffered massive disruption last summer as the aviation sector struggled to cope with staff shortages and travellers were met with sudden flight cancellations and severe delays.
READ MORE: Heathrow boss John Holland-Kaye who pocketed £1.5million in 2021 steps down from leading airport that lost £4bn in Covid pandemic and was hit by massive queues and baggage chaos on his watch
Thousands of items of luggage were left behind at Heathrow after a baggage system ‘glitch’ in June 2022
Heathrow – which is owned by Spanish group Ferrovial and investors including the Qatar Investment Authority – said passenger numbers trebled to 61.6 million, up by 42.2 million on a Covid-impacted 2021, which it claimed was the biggest increase of any major global airport.
Mr Holland-Kaye said ‘2022 may have been a year of recovery, but 2023 is shaping up to be a year of renewal for Heathrow’.
He added: ‘Our teams have already delivered a successful Christmas and half-term getaway, and with a great investment plan in place, we are determined to once again rank in the top 10 airports for service.’
Mr Holland-Kaye announced plans earlier this month to step down later this year after nine years in the role.
He will remain in post until a successor is appointed.
The group blamed inflation and lower passenger numbers for holding back progress on its bottom line, while it also hit out at ‘insufficient regulated charges’.
Pandemic travel curbs were only lifted widely in March last year after two years of closures, while Heathrow was also forced to impose a cap on passenger numbers due to last summer’s staff shortages.
The cap was removed at the end of October and Heathrow said it boosted its workforce to nearly 75,000 by the end of 2022 to ‘get capacity, service levels and resilience back to the high levels that they were before the pandemic’.
But the group is also now grappling with industrial action after UK airports were hit by severe disruption in the run-up to Christmas, with Border Force staff staging strike action in December.
And new strikes loom for the busy Easter holiday season after the Unite union said its airport worker members would vote on whether to stage industrial action in a dispute over pay, with the outcome of the ballot due on March 17.
More than 3,000 Heathrow security guards, firefighters, and engineers are currently voting on whether to take strike action.
Unite the union said its members rejected a 10 per cent salary hike because it is lower than the current retail price inflation rate of 13.4 per cent.
Its regional co-ordinating officer Wayne King said: ‘If our members at HAL [Heathrow Airport Limited] take strike action, it will inevitably cause severe disruption throughout Heathrow with delays, disruption and cancellations of flights inevitable.
‘This dispute is of HAL’s own making. Its employees are struggling to make ends meet; HAL has the opportunity to ease their financial burden but is refusing to step up and do the right thing.
‘This isn’t about what our members want; this is about what they need for them and their families. This is about need, not greed.’
A Heathrow spokesperson said: ‘We are extremely disappointed that Unite is tabling a formal ballot for industrial action.’
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